2003 Wheat Industry Conference Notes

USDA’s Moseley: Biotech Issue Reaching “Flashpoint”

Despite a continued rise in global wheat consumption and global wheat stocks at their lowest level in about seven years, U.S. wheat exports are down about 60 million bushels from last year, and 160 mil bushels from two years ago.

Filling the breach is the emergence of so-called “Black Sea competitors,” who are dramatically changing the global wheat trade picture.  “Cheap and abundant wheat from countries of the Former Soviet Union is taking markets from other exporters, especially exporters with very tight supplies,” said USDA Deputy Secretary Jim Moseley, who addressed the Wheat Industry Conference held recently in Albuquerque, New Mexico. “Even the European Union, which has a near-record harvest, is having a tough time competing.”

This year, shipments from former FSU countries are forecast at nearly 24 million tons or about 880 mil bu., compared to under 5 million tons (183 mil bu.) just two years ago. Top destinations are the EU, North Africa, and the Middle East – large buyers on the FSU doorstep – but sales are spreading to Asia and Latin America.

“It’s our feeling that these new exporters may be in the market to stay,” said Moseley. “If the quality of the Russian and Ukrainian wheat is acceptable, many first-time importers may consider switching long-term.”

Against this shifting global picture and outlook, he said some growers are looking to other possibilities, such as the market potential of biotech wheat. “Biotech crops, after all, keep input costs down. With less herbicide required, farmers can handle many more acres. The pluses, of course, must be balanced with a major negative: lack of acceptance in some markets and pressure to segregate GM crops before marketing.”

The first biotech wheat is moving closer to the commercial market, as Monsanto petitioned USDA in December to deregulate Roundup Ready wheat, a variety developed to lower production costs and achieve higher quality by giving growers better options for weed control.

In a lengthy process, a review team of APHIS scientists will evaluate the environmental impact and give the public ample time to comment on the release of RR wheat before making a final decision, Moseley said.  The EPA and FDA will be making their own safety reviews.

“The bottom line is that consumers of this product, if it is approved, can, and should, have full confidence that this GM wheat is just as safe as other wheat varieties.”  Science and regulation are just the start of the “fierce” biotech debate, Moseley said, and the U.S. needs to continue to prepare and educate overseas markets.

“Issues of biotechnology are, frankly, reaching a flash point,” he said. “As one case in point, disease-resistant GM bananas have already been developed. But as National Public Radio reported, growers in some African countries won’t plant them because officials fear Europe’s resistance to biotech foods. We cannot let irrational public opposition in Europe prevent the rest of the world from accessing this technology.”

To foster global understanding of the role of agricultural science and technology, USDA Secretary Ann Veneman will host a ministerial-level conference in June in Sacramento, Moseley said.  “We’ll focus on the needs of developing countries in adopting new technologies and accessing them through public-private partnerships. We expect Ministers from over 180 nations and organizations to attend.”

Moseley said that USDA will hold firm in its position that biotechnology remains one of the best tools and brightest hopes for addressing global concerns that include hunger, malnutrition, water scarcity and environmental degradation.

“In the words of 1970 Nobel Peace laureate Norman Borlaug, ‘Genetic engineering of crops ... is the progressive harnessing of the forces of nature to the benefit of feeding the human race.’ And that – feeding the human race – is what we are all about, working together, to keep our food and agriculture safe and protected ... and our products, based on sound science, moving openly in fair trade.”

Texas Wheat Grower Elected President of NAWG
Texas wheat grower Tommy Womack was named president of the NAWG at the Wheat Industry Conference in Albuquerque. Womack succeeds Gary Broyles of Rapelje, Mont. Join-ing Womack on the NAWG Executive Committee are vice president Mark Gage, Page, N.D.; vice president Sherman Reese, Oregon, and Secretary-Treasurer Dale Schuler, Carter, Mont.

Alan Lee elected USW Chairman
At their recent annual winter meeting, the U.S. Wheat Associates Board of Directors elected officers for 2003/04. The officials of the industry’s market development organization will assume their new duties following the summer board meeting, which will be held in Boise, Idaho in July.

Moving up the ladder to assume the chairmanship will be Alan Lee, the current vice chairman. A third generation farmer from North Dakota, Lee represented farmers in the northwest district of the state on the North Dakota Wheat Commission from 1993 to 2001, chairing the commission from 1996 to 2001. He served on the executive committee of the North Dakota Ag Coalition and was previously on the wheat granting committee of the State Board of Agricultural Research and Education.

Oklahoma wheat producer Keith Kisling will move from secretary-treasurer to vice chairman. Jim White, from the state of Washington, was elected secretary-treasurer. The current chairman, Jim McDonald from Idaho, will assume the duties of chairman of the USW budget committee when he steps down in July to become past chairman.

U.S. Wheat Associates is the industry’s export market development organization, working around the world on behalf of America’s wheat growers. It is supported in part by the wheat checkoff in wheat-producing states.

Export Subsidies:

“Worst Should Go First”

Allen Johnson, special negotiator for the office of the United States Trade Representative (USTR), told participants of the Wheat Industry Conference that the U.S. has three goals it wishes to achieve in agricultural trade negotiations of the World Trade Organization: 1) Elimination of all export subsidies within five years; 2) Reducing, if not eliminating, trade distortion; and 3) Harmonizing market access.

Even developing countries are impacted by export subsidies, and Johnson pointed out that over 90% of the world's export subsidies are paid by the European Union. He singled out export subsidies as the most distorting trade practice in the world, and suggested that "the worst should go first" in elimination. However, key global ag trade players such as Europe, Australia and Japan are resisting bold trade reform.

The WTO will meet March 31 where participating countries hope to reach an agreement on a stalemate toward ag trade reforms. Johnson admitted that even if only one or two countries do not meet the deadline, it could make for difficulties in accomplishing any goals for agricultural trade this year. “If we don't have a clear direction on March 31, then the WTO negotiations will likely stall. There is a lot at stake to making that deadline.”

2003 NAWG Resolutions

At the 2003 Wheat Industry Conference, wheat growers from across the U.S. established policy resolutions to guide the NAWG over the course of the next year. Following are a number of new resolutions. The entire list, including the U.S. wheat industry’s position on biotechnology, can be found on the NAWG’s web site, www.wheatworld.org .

• NAWG supports the study of a National Wheat Variety Registry.
• NAWG opposes further payment limitation reductions.
• NAWG opposes the opening of the recently adopted “2002 Food Security Act.”
• NAWG will take a leadership role on extending the funding authority of the Hard White Wheat Incentive Program.
• NAWG supports RMA providing separate coverage levels and price elections for each class of wheat and allowing differing levels of coverage for varying cropping practices within a unit.
• NAWG recommends that on final claim adjusting for crop insurance, the crop appraisal would be zero if the cost of harvest (based on custom harvest rate) was equal to or greater than the production value. The crop may be harvested without any penalty or offset to claim.
• NAWG supports that the crop insurance payment for Hard White Wheat be 20 cents above Hard Red Wheat
• NAWG supports accelerating the time table for increasing the maximum amounts of the estate tax exemptions, provided stepped up basis is retained. Ten million dollars should be the maximum upon which no estate tax would be paid.
• NAWG opposes any protectionist trade legislation or unilateral sanctions that would endanger U.S. grain exports.
• NAWG supports eliminating barriers which restrict U.S. ag producers access to world wide crop inputs.
• NAWG supports the reduction of trade distorting subsidies to 5% of total ag production by 2010 in WTO negotiations as proposed by USTR. This pursues the elimination of export subsidies and export restrictions and forces any exporting trading enterprises to operate at risk of the market on a transparent and voluntary basis. NAWG also supports the USTR proposal to reduce all tariffs by WTO members to zero by 2010.
• NAWG supports providing reciprocal research, registration, and regulation of crop protection and biotech products between the U.S. and other countries.
• NAWG urges international harmonization of scientific standards and trade rules.
• NAWG urges the development of new and creative export programs that provide a way to compete with subsidized sales and unfair currency adjustments from foreign countries.
• NAWG supports price harmonization on all crop protection products.
• NAWG supports full implementation of the Conservation Security Program.
• NAWG supports federally approved grain quality tests that are accurate, consistent, repeatable, simple, fast, inexpensive, can be implemented by grain elevator operators and which objectively describe end use quality.

NAWG Domestic Policy Goals

Short Term

• Support targeted crop loss and quality loss disaster assistance.
• Crop Insurance Reform.
• Continue pursuit of increased rail transportation competitiveness.
• Funding of farm policy public education.

Long Term

• Continue with crop insurance reform.
• Farm Policy Public Education.
• Eliminate capital gains tax
• Increase market share of U.S. wheat around the world.

NAWG International Policy Goals

Short Term

• Support close monitoring and enforcement of China’s implementation of their WTO accession commitments.
• Support elimination of all U.S. unilateral sanctions.
• Support open commercial trade with Cuba.
• Support aligning the U.S. wheat industry’s domestic policy goals and its WTO strategy.
• Support aggressive funding of the Foreign Market Development (FMD) program.
• Support development of joint policy by the U.S. wheat industry regarding karnal bunt.

Long Term

• Support completion of the Free Trade of Americas negotiations by 2003-2005
• Support a comprehensive WTO strategy which:
• Eliminates export subsidies.
• Preserves flexibility in U.S. farm policy.
• Disciplines state trading enterprises.
• Opens new markets by reducing tariffs.
• Establishes a stronger international alliance with other agricultural organizations to facilitate grower-to-grower dialogue.
• Coordinate the introduction of new wheat production technologies with customer acceptance.
• Immediately begin and continue to educate our customers of the safety and value of future wheat technologies.

2003 NAWG Committee Assignments

Wheat growers from across the nation help lead the National Association of Wheat Growers by participating in the NAWG’s committee structure.  Following are committee assignments of grower leaders from the Northern Plains.

Membership: Grower representative to be announced, South Dakota

Domestic Policy: Lochiel Edwards, Big Sandy, Mont.; Bruce Frietag, Scranton, N.D.

International Policy: Herb Karst, Sunburst, Mont., chairman.

Environmental Policy: Richard Mag-nuson, Roseau, Minn.

Research & Value Added: Mike Bruer, Alberta, Minn., chairman; Greg Daws, Michigan, N.D.; Carl Schwab, Andover, S.D.

Joint Biotechnology: Darrell Hanavan, chair, Colorado; Greg Daws, Michigan, N.D.; Larry Lee, Velva, N.D. (representing U.S. Wheat Associates) Bill Ferguson, Witten, S.D. (representing USW).

Budget: Dale Schuler, Carter, Mont., chairman

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USDA Deputy Secretary Jim Moseley responds to questions from reporters at the 2003 Wheat Industry Conference held recently in Albuquerque, New Mexico, including questions from Red River Farm Network broadcaster, Mike Hergert (right)